The Kheri Daulatpur Cooperative L&C Society Ltd., Bhiwani V. ITO, Rohtak

ITA 2002/DEL/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3965 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 13-05-2011
• Assessment Year: 1999-2000
• Appeal Filed On: 03-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K MONGA
• Assessee Lawyers: NK JAIN
• Keywords: Reopening of assessment; Audit objection; Principle of natural justice; Difference of opinion; Revised return; Change of opinion
• Section: 142(1); 234B; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI B.K. HALDAR ITA NOS. 2001 & 2002/DEL/2010 ASSTT. YR: 1999-2000 THE KHERI DAULATPUR COOP. VS. INCOME-TAX OFFICER , L&C SOCIETY LTD., WARD-2, BHIWANI. KHERI DAULATPUR. (APPELLANT ) ( RESPONDENT ) APPELLANT BY : SHRI N.K. JAIN ADV. RESPONDENT BY : SHRI A.K. MONGA DR O R D E R PER BENCH : THESE ARE TWO ASSESSEES APPEALS RELATING TO A.Y. 1 999-2000. BOTH THE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY A COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. IN ITA NO. 2001/DEL/10 FOLLOWING GROUNDS ARE RAI SED: 1. THAT INTIMATION OF PROCEEDINGS U/S 148 BASED ON AUDIT OBJECTION IS ON MERELY ACCOUNT ON CHANGE OF OPINION OUGHT TO HAVE BEEN HELD TO BE ILLEGAL. 2. THAT THE ASSESSMENT ORDER PASSED U/S 144 WITHOUT SERVICE OF NOTICE U/S 148 AND U/S 142(1) OF THE INCOME TAX ACT IN AS PER STATUTORY PROVISION SHOULD HAVE BEEN HELD TO BE ILL EGAL AND WITHOUT AUTHORITY OF LAW BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS). 3. THAT THE APPLICATION OF 8% PROFIT NON THE GROSS PAYMENTS RECEIVED BY THE APPELLANT AS SHOWN IN P&L A/C WITHO UT REJECTING BOOKS OF ACCOUNTS AND IN THE ABSENCE OF A NY ADVERSE ITA NOS. 2001 & 2002/DEL/10 THE KHERI DAULATPUR COOP. 2 MATERIAL AND WITHOUT GIVING ANY OPPORTUNITY OUGHT T O HAVE HELD TO BE ILLEGAL IN THE FACTS OF THE CASE. 4. THAT THE DISALLOWANCE OF DEDUCTION U/S 80P(2)(VI ) WHICH WAS ALLOWED DURING THE PROCESSING OF THE ORIGINAL R ETURN ONLY ON ACCOUNT OF OPINION OUGHT TO HAVE BEEN HELD TO BE IL LEGAL AND AGAINST THE PROVISIONS OF LAW. 5. THAT THE LD. APPELLATE AUTHORITY WAS ALSO NOT JU STIFIED IN LAW IN UPHOLDING THE ASSESSMENT ORDER UP TO THE EXT ENT OF CHARGING OF INTEREST U/S 234A AND 234B AGAINST LAW. 6. THAT THE LD. APPELLATE AUTHORITY IS ALSO SILENT ABOUT THE LAW AND RULINGS REFERRED DURING THE COURSE OF ARGUM ENTS. THE LD. APPELLATE AUTHORITY HAS NEITHER APPRECIATED NOR CONSIDERED THE JUDICIAL PRONOUNCEMENTS. 7. THAT THE ORDER OF THE LEARNED APPELLATE AUTHORIT Y IS AGAINST THE LAW, FACTS AND NATURAL JUSTICE. 8. THAT THE APPELLANT RESERVES THE RIGHT TO ADD, AM END OR ALTER ANY GROUNDS OF APPEAL EITHER AT THE TIME OF T HE HEARING OF APPEAL OR PRIOR TO THE HARING OF THE APPEAL. 2.1. ITA NO. 2002/DEL/02 HAS BEEN FILED BY THE ASSE SSEE AGAINST THE ORDER OF CIT(A), SUSTAINING PENALTY U/S 271(1)(B) FOR N ON-COMPLIANCE OF NOTICE. ITA NO. 2001/DEL/10 : 3. BRIEF FACTS ARE THAT THE ASSESSEE IS A COOPERATI VE SOCIETY, ENGAGED IN COLLECTIVE DISPOSAL OF LABOUR OF MEMBERS. ORIGINAL RETURN OF INCOME WAS FILED ON 23-12-1999 CLAIMING DEDUCTION U/S 80P(2)(V I) AND DECLARING NIL TAXABLE INCOME; THE SAME WAS PROCESSED U/S 143(1)(A ) ON 21-9-2000 ACCEPTING THE ASSESSEES RETURN. THEREAFTER, ON 21- 3-2006, ON THE BASIS OF ITA NOS. 2001 & 2002/DEL/10 THE KHERI DAULATPUR COOP. 3 ALLEGED AUDIT OBJECTION, THE AO SOUGHT APPROVAL OF THE ADDL. CIT FOR REOPENING OF ASSESSMENT, WHICH WAS RECEIVED ON 23-3 -2006. CONSEQUENTLY, ON 24-3-2006 THE AO ISSUED NOTICE U/S 148, BY REGIS TERED POST, REQUIRING THE ASSESSEE TO FURNISH ITS REVISED RETURN OF INCOME B Y 23-4-2006. COPY OF NOTICE U/S 148 WAS ALSO DIRECTED TO BE SERVED BY AF FIXTURE ON 25-3-2006. THE ASSESSEE STATES THAT NONE OF SUCH NOTICES WERE SER VED ON THE ASSESSEE AT ALL. ASSESSMENT WAS FRAMED U/S 144 ALLEGING THAT ASSESSE E NEITHER FILED RETURN NOR ATTENDED. 3.1. THE ASSESSEE, FROM THE COPY OF AOS ORDER-SHEE T, STATES THAT ON 24-3- 2006 AO NOTED THAT NOTICE MAY BE SERVED BY REGISTER ED LETTER AND IS ALLEGED TO BE SENT AND ON 24-3-2006 ITSELF AN AFFIXTURE NOT ICE IS DIRECTED TO BE SERVED ON THE ASSESSEE. THE NOTING ON 25-3-2006 RECORDING SERVICE BY AFFIXTURE ON FACE OF IT LOOKS TO BE AN INTERPOLATION IN RECORD. THERE IS NEITHER ANY PROOF ON RECORD THAT ANY REGISTERED NOTICE WAS RECEIVED B Y THE ASSESSEE NOR THERE IS PROOF ABOUT SERVICE BY AFFIXTURE ON THE ASSESS EES PREMISES ON NEXT DAY. ASSESSEES OFFICE IS SITUATE AT 25 KMS. AWAY FROM T HE ITOS OFFICE. 4. LEARNED COUNSEL CONTENDS THAT IMPUGNED EX PARTE ASSESSMENT ORDER IS HIGHLY UNJUSTIFIED AND IN THE ABSENCE OF RECEIPT OF NOTICE U/S 148 BEFORE 31- 3-2006, THE REOPENING IS BAD IN LAW. AS PER PROVISI ONS OF SEC. 149 THE NOTICE WAS TO BE SERVED ON THE ASSESSEE WITHIN A PERIOD OF SIX YEARS FROM THE END OF ITA NOS. 2001 & 2002/DEL/10 THE KHERI DAULATPUR COOP. 4 THE ASSESSMENT YEAR. IT IS PLEADED THAT THE ASSESSM ENT BEING BAD IN LAW MAY BE QUASHED. ALTERNATIVELY, SINCE THE PRINCIPLES OF NATURAL JUSTICE HAVE BEEN VIOLATED FOR WANT OF PROPER SERVICE ON THE ASSESSEE , THE ASSESSMENT PROCEEDINGS MAY BE SET ASIDE. 5. LEARNED DR IS HEARD. 6. WE HAVE HEARD RIVAL SUBMISSIONS AND HAVE GONE TH ROUGH THE ENTIRE MATERIAL AVAILABLE ON RECORD. IN OUR VIEW, THE ENTI RE PROCESS NEEDS TO BE SET ASIDE INASMUCH AS THE CIT(A) HAS NOT REFERRED TO AN Y PROOF OF SERVICE OF NOTICE U/S 148 ON THE ASSESSEE. ON THE BASIS OF SOM E OTHER CORRESPONDENCE, WHICH ALSO HAS A REMARK OF POSTAL AUTHORITY INFORM ED HIS WIFE .. KEEP IN CUSTODY DATED 23.1.2007, IT HAS BEEN ASSUMED THA T THE RECIPIENT WAS NOT AVAILABLE TO RECEIVE NOTICES U/S 148 INSPITE OF REP EATED VISITS. IN OUR VIEW, THIS IS NOT IN RELATION TO THE SPECIFIC NOTICE U/S 148 IN QUESTION, WHICH IS VITAL FOR ASSUMING JURISDICTION. WE ARE ALSO UNABLE TO COMPREHEND, WHEN RPAD NOTICE WAS ALREADY SENT ON 24-3-06 THEN WHY THERE W AS NEED TO IMMEDIATELY SEND A BALLIF / INSPECTOR 25 KMS. AWAY ON 25-3-2006 TO SERVE THE NOTICE BY AFFIXTURE. IN ANY CASE THE ASSESSEES CLAIM THAT NO NOTICE U/S 148 WAS SERVED ON THE ASSESSEE NEEDS TO BE EXAMINED. IN CASE OF NO N SERVICE, THE REASSESSMENT MAY BECOME BAD IN LAW, WHICH AO HAS T O DETERMINE AFTER VERIFICATION OF THE RECORD. ITA NOS. 2001 & 2002/DEL/10 THE KHERI DAULATPUR COOP. 5 6.1. ON MERITS ALSO, ASSESSEE COULD NOT PRODUCE IT S P&L A/C WHICH IS CLAIMED TO HAVE BEEN SUBMITTED ALONG WITH THE ORIGI NAL RETURN OF INCOME. IN THESE CIRCUMSTANCES, WE ARE INCLINED TO SET ASIDE T HE ENTIRE PROCEEDINGS BACK TO THE FILE OF AO TO DECIDE THE SAME AFRESH KEEPING IN VIEW THE SUPREME COURT JUDGMENT IN THE CASE OF G.K.N. DRIVE SHAFT 25 ITR 19. THE AO SHALL CONSIDER THE OBJECTIONS, IF ANY, FIELD BY THE ASSES SEE AND DECIDE THE MATTER IN ACCORDANCE WITH LAW. FURTHER, THE ASSESSEE HAS BEE N HELD ELIGIBLE FOR DEDUCTION U/S 80P(2)(VI). IT SEEMS THE ASSESSEES WORK IN THIS YEAR IS OF CONSTRUCTION ON THE BASIS OF COLLECTIVE DISPOSAL OF LABOUR AND A SMALL PART IS CLAIMED TO BE SUPPLY OF MATERIAL. DEDUCTION U/S 80P (2) IS ALLOWABLE IN RESPECT OF COLLECTIVE DISPOSAL OF LABOUR AND NOT FO R SUPPLY OF MATERIAL. IT IS TO BE VERIFIED WHETHER THE SUPPLY OF MATERIAL WAS INTE GRAL PART OF COLLECTIVE DISPOSAL OF LABOUR. IN THE ABSENCE OF FACTS AND FIG URES, WE ARE UNABLE TO GIVE ANY OPINION. AO WILL KEEP THIS ISSUE IN MIND WHILE PROCEEDINGS WITH THE MATTER FURTHER. WE ORDER ACCORDINGLY. 7. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 2002/DEL/10 : 8. THE AO IMPOSED PENALTY U/S 271(1)(B) FOR NON-FIL ING OF RETURN AS REQUIRED BY NOTICE DATED 24-3-2006 ISSUED U/S 148. AS OBSERVED ABOVE, SERVICE OF NOTICE U/S 148 ITSELF IS IN QUESTION. BE SIDES, PENALTY U/S 271(1)(B) ITA NOS. 2001 & 2002/DEL/10 THE KHERI DAULATPUR COOP. 6 CANNOT BE IMPOSED FOR NON-FILING OF RETURN, SAME I S IMPOSSIBLE FOR NON- ATTENDANCE AND NON-COMPLIANCE OF NOTICE U/S 143(2) OR 142(1), SPECIFICALLY. SECTION 271(1)(B) DOES PENALIZE NON-COMPLIANCE OF N OTICE FOR FILING OF RETURN IN PURSUANCE TO SEC. 148. IN OUR VIEW, THE IMPUGNED PENALTY IS NOT MAINTAINABLE, WHICH IS DELETED. IN THE RESULT APPEA L IS ALLOWED. 9. IN THE RESULT, ITA NO. 2001/DEL/10 IS ALLOWED FO R STATISTICAL PURPOSES AND ITA NO. 2002/DEL/10 IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 13-05-2011. SD/- SD/- ( B.K. HALDAR ) ( R.P. TOLANI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 13-05-2011. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR